Menswear e-commerce startup JackThreads hanging by a thread

Dive Brief:

  • JackThreads, struggling to gain traction amid falling sales, has laid off most of its staff, according to Recode and Fortune. A spokesperson told Retail Dive that over the last few months, the company has been "in M&A conversations with multiple potential acquirers."

  • The online menswear company began as a flash sales site in 2008 and was acquired by decade-old media company Thrillist in 2010.

  • JackThreads in 2015 left the Thrillist fold and later abandoned its flash-sales, members-only approach. Its “TryOuts” service allowed customers to order items without paying unless they decided to keep them, but that has been suspended, according to its website

Dive Insight:

Flash sales, after initially taking online retail by storm, fell out of favor as inventory buildups of better merchandise tapered off once the recession ebbed. JackThreads was forced to find other ways to build its assortment, which caused it to suffer mixed reviews for quality and price. Recently, it began selling higher quality brands like the North Face, but its free shipping both ways and TryOuts policy may also have been costly maneuvers.

The company is now running with just a few employees as its seeks a buyer, according to the reports. "A few weeks ago we made changes to meaningfully reduce the burn and to enable these various conversations to reach their conclusions," a spokesperson told Retail Dive in an email. "We're confident this effort will help us to finalize one of several deals on the table and to maximize the opportunity for both our employees and investors."

Customers have complained on Twitter and elsewhere that orders were canceled without notice, refunds on returned merchandise weren’t forthcoming and that its TryOuts service is no longer available.

Nordstrom’s experience with its concierge service Trunk Club unit also signals the difficulty JackThreads may have in any deal. In November, Nordstrom took a massive $197 million write-down on Trunk Club, and in January founder Brian Spaly left Nordstrom and his role as head of the unit. The department store retailer acquired Trunk Club in 2014 (later expanding into women’s apparel), and it proved to be a drag on that retailer’s sales. Nordstrom recently instituted a $25 try-on fee and stricter shipping prices for Trunk Club customers, a departure from its own free shipping both ways e-commerce policy. 

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